Since Forbes hired me in 1995 to write a legal column, I’ve taken advantage of the great freedom the magazine grants its staff, to pursue stories about everything from books to billionaires. I’ve chased South Africa’s first black billionaire through a Cape Town shopping mall while admirers flocked around him, climbed inside the hidden chamber in the home of an antiquarian arms and armor dealer atop San Francisco’s Telegraph Hill, and sipped Chateau Latour with one of Picasso’s grandsons in the Venice art museum of French tycoon François Pinault. I’ve edited the magazine’s Lifestyle section and opinion pieces by the likes of John Bogle and Gordon Bethune. As deputy leadership editor, these days I mostly write about careers and corporate social responsibility. I got my job at Forbes through a brilliant libertarian economist, Susan Lee, whom I used to put on television at MacNeil/Lehrer NewsHour. Before that I covered law and lawyers for journalistic stickler, harsh taskmaster and the best teacher a young reporter could have had, Steven Brill.

Why Romney And Obama Can't Fix The Unemployment Problem

Mitt Romney: The unemployment problem is much bigger than female job loss.

When I wrote a piece yesterday saying that Mitt Romney’s attack on President Obama over women’s jobs was misleading, I got a number of comments decrying the President’s economic policies and his failure to create jobs.

To recap: Romney has been saying that 92.3% of the jobs lost during President Obama’s term were lost by women. I pointed out that it’s typical in a recession for men to suffer the first job losses, since male-dominated work like manufacturing and construction tend to be the first to take a hit. If you look to the beginning of the recession in December 2007, you see that men lost almost 3.3 million jobs in the 13 months before President George W. Bush left office. Women lost almost 1.2 million jobs during that time. Then under Obama, women caught up a bit, losing 683,000 jobs, while men lost 57,000. So Romney’s contention is technically correct, but fails to acknowledge that male and female job losses have followed the pattern of the typical recession.

Then this morning, I read an editorial by Chrystia Freeland of Reuters, which made me think of a bigger problem with all the political rhetoric about job loss and job creation: the rise of structural unemployment. Romney can cut all the taxes he likes, and Obama can try to pass more stimulus programs, but no policy can remedy this deeper trend in the economy.

The Freeland piece picks up on a new study by two economists, Nir Jaimovich of Duke University and Henry Siu of the University of British Columbia, who look at what’s been called “polarization” in the job market. Technology has meant that increasing numbers of routine tasks are performed by machines. We see this in manufacturing, but I also see it when I go to my corner Walgreen’s, where three automated check-out stands eliminate the need for cashiers (except when the things break down, which is frequently, and a human has to reset them). It’s not just lower-level work like repetitive manufacturing jobs or checkout counters, as Freeland points out. Machines also do the work of travel agents and even legal discovery that used to be handled by well-paid associates with law degrees.

Freeland also mentions two London School of Economics professors, Maarten Goos and Alan Manning, who have talked about the rise of “lousy and lovely” jobs. The “lovely” jobs are the ones that pay a lot, like computer software design or managing complex litigation. The lousy jobs are the manual tasks that can’t (yet) be done by machines, like collecting garbage or chopping onions in a restaurant.

It’s the jobs in between that are getting squeezed out in each recession, and those jobs never come back, according to Jaimovich and Siu. That explains the so-called jobless recoveries the U.S. has experienced after the last three recessions and it helps explain the March employment news, where there were 34,000 fewer retail jobs, despite improving store sales. As Best Buy knows, e-commerce is putting huge pressure on the sector.

Presidential policy can go some distance toward preventing the next recession. If the U.S. can avoid creating another real estate or financial bubble, that could avoid another downturn that would stimulate more job loss. But what I take away from the Freeland piece is that no tax cut or stimulus plan will bring back most of the jobs that this last recession erased.

What’s more, Freeland focuses on how technology is wringing mid-range jobs out of the economy. She doesn’t even touch on the other giant structural change affecting jobs: the vast migration of work to low-wage overseas centers like China and India. I’ve yet to hear a word from Obama or Romney that can convince Apple to start manufacturing iPads in California.

Romney can blame Obama for female job loss and the President can claim to have a fix for the jobless recovery. But bigger structural changes in the employment picture mean, unfortunately, that neither has a ready fix for the employment challenge America faces.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.

Comments

So lower taxes do not create economic opportunities. It does not matter if corporate taxes were 80% or 10%, the number of corporations and their attendant economic activity would be the same.

It does not matter if the government take is 10% of the economy or 40%, the amount of goods produced will be the same.

Is that your argument?

You should head back and take an introductory economics course, perhaps with an emphasis on the economics of the Reagan era, when the economy and the US, overwhelmed with Carter’s ineptitude, high unemployment, high inflation, high taxes, and stagnation, were transformed with lower taxes.

And quoting the marxist LSE and its graduates really does not help your case.

I understand the argument that cutting taxes stimulates growth, though I don’t necessarily agree with it. What I’m saying is that beyond tax cuts or stimulus spending, there are bigger, structural problems with the American employment picture. Automation and globalization have eliminated millions of jobs; I don’t believe tax cuts or spending will restore those jobs.

So you will work just as hard and be just as productive if the government takes 80% of your income rather than 10% of your income?

Is that what you’re saying?

To the contrary, Susan, the US Government has eliminated millions of jobs by regulating corporations to death and flight, by taxing people to death and flight.

I have heard this tired argument before that innovation creates job losses. Wrongo!

Innovation makes our lives far easier and productive. The internet has revolutionized access to information. Whole industries have sprung up around it. We are all wealthier because of the innovations. All you can do is lament the loss of jobs in the horse buggy building business, coal distribution, or in Encyclopedia book sales.

Certainly those jobs in dying industries will not return, and good for everyone. Good that we don’t have to rely upon a coal furnace and delivery for warmth. Good that we have autos instead of a horse and buggy. Good that we have electricity.

But how much happier we were when there were no such things as computers, cities, electricity, autos, etc.

You have no idea what the problem is nor what the solution is. Maybe you should seek a job in another business.

Susan, I agree with your automation and globalization comment, but do not think that the jobs have left more than they have transformed. Automation needs engineers, designers, and manufacturers to keep this economy moving. I say, get the economy going by lowering the corporate tax rate (highest in the world) and then deal with companies on ways to train some of these new employees. I watched Reagan change the outlook on our economy in the early 80s and believe we need the same frugal outlook.

History shows us that when things cost more, people do work harder to afford them. If the price of food and rent go up, people work harder to afford them. If the price of civilization (i.e. taxes) go up, people work harder. This is true at the bottom, where us ordinary mortals live.

Now, in the case of people taking home hundreds of millions a year, it turns out that they are not actually driven by money except as a form of score keeping. It matters to them to make 80 million dollars, for example, because they’re in competition with the guys making 70 and 90 million dollars. They rank themselves according to money.

But it’s just the number and not the money. If you told them all that from now on, they would get “points” instead of dollars, they would still compete just as ferociously. They are driven to compete just like artists are driven to paint.

Carter chose Volker as head of the Fed, and Volker jacked up the prime rate pronto. The resulting contraction happend immediately, and with the Iran-Contra affair keeping the hostages held untill Reagan was sworn in, Carter was doomed at the polls.

I disagree. We can say for sure that Obama doesn’t have a clue on how to bring the economy to life. But to say no one has a way to deal with structural unemployment misses the point. Get the economy growing. That is job one. There is no secret about how to do this despite what Obama and his supporters say.

While it’s true that low skill jobs are being squeezed out that is nothing new. There has been whining about structural unemployment since the dawn of the industrial revolution. Or maybe before: the guy who invented the wheel probably got blamed for rising unemployment. Like the Malthusian arguments this just won’t die despite the overwhelming empirical evidence against it. I suppose that’s because it gives people like you something to write about and failures like Obama something to run on.